Lower-than-expected results were impacted by a dip in total
revenue and elevated non-interest expenses. Yet, loans and deposits
growth coupled with improving credit quality were the tailwinds for
the quarter.

For the full year 2012, net loss reached $218.5 million or $1.37
per share, compared with net income of $109.4 million or 71 cents
per share in the prior-year period. The full year earnings were
above the Zacks Consensus Estimated loss of $1.34 per share.

Full year results included after-tax charge of $20.6 million or 13
cents per share, based on the impact of the implementation of the
clarifying regulatory guidance in the third quarter and $295.8
million or $1.87 per share, associated with balance sheet
repositioning in Mar 2012.

Performance in Detail

TCF Financial reported total revenue of $301.2 million in the
quarter, down 3.7% sequentially, attributable to lower non-interest
income. However, the results surpassed the Zacks Consensus Estimate
of $297.0 million.

For full year 2012, total revenue was $1.3 billion, up 11% from
$1.1 billion in the prior year. Revenue results also outpaced the
Zacks Consensus Estimate of $1.2 billion.

Net interest income climbed 0.3% sequentially to $201.1 million.
The augmentation was driven by lower interest expenses. Net
interest margin was 4.79%, contracting 6 basis points sequentially,
primarily due to lower yields on new originations in the national
lending portfolio.

Non-interest income came in at $100.1 million, down 10.7%
sequentially. The decrease was primarily attributable to lower ATM
revenue and reduced gain on sale of auto loans and consumer real
estate loans.

With the decreased level of non-performing assets in the quarter,
credit quality improved on the whole. Provisions for credit losses
dipped 49.6% sequentially to $48.5 million, owing to non-recurring
impact associated with the adoption of clarifying
bankruptcy-related regulatory guidance in the third quarter.

Net charge-offs were $45.6 million in the quarter, down 56.4%
sequentially. The fall compared to the prior period was mainly
attributable to additional net charge-offs of $43.9 million related
to the implementation of bankruptcy-related regulatory guidance
included in the third quarter.

Moreover, non-accrual loans and leases inched down 10%
sequentially to $379.5 million, driven by a dip in commercial
non-accrual loans. However, allowance for loan and lease losses
increased to $267.1 million, up 0.9% sequentially.

Capital Position

As of Dec 31, 2012, the company's total risk-based capital ratio
was 11.09% compared with 12.67% as of Dec 31, 2011. The tier 1
common capital ratio was 9.21% compared with 11.74% in the prior
year.

As of Dec 31, 2012, total deposits improved 15.2% year over year
to $14.1 billion. Period end loans and leases were $15.1 billion,
up 4.1% year over year.

Peer Performance

Among TCF Financial's peers, Commerce Bancshares,
Inc. ( CBSH ) reported fourth
quarter 2012 earnings of 72 cents per share, in line with the Zacks
Consensus Estimate as well as the prior-quarter earnings. However,
this compared favorably with the year-ago quarter's earnings of 66
cents.

Results for the quarter were aided by an augmented top line,
partly offset by higher expenses. Credit quality and capital ratios
showed mixed trends. However, sustained growth in loans and
deposits were the highlights for the quarter.

Our Viewpoint

We expect the company to maintain its superior position in the
market based on its positive approach to market conditions and
improving net interest income. Moreover, a healthy capital position
is indicative of the company's robust standing. However, the
regulatory reforms might affect the company's near-term results to
some extent.

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